Provision of Local Employment Services: Discussion

Apologies have been received from the Leas-Chathaoirleach, Deputy Ó Cathasaigh, agus na Seanadóirí Garvey agus Gavan. I remind members participating remotely that they must do so from the precincts of Leinster House. As we have two separate sessions in this morning's meeting with eight witnesses, and are limited to a two-hour slot, I propose our normal housekeeping business of minutes, correspondence, etc., be deferred to next week's meeting. Is that agreed? Agreed.

The purpose of this meeting is to continue our engagement on the subject of the provision of local employment services. We have already convened one meeting on this matter prior to the summer recess with the Irish Local Development Network, ILDN, and today we will hear from union representatives from SIPTU and Fórsa. In the second session, we will hear from senior officials from the Department of Social Protection.

I welcome the witnesses to our first session, which will conclude at 10.30 a.m. I welcome the following: Mr. John King, deputy general secretary of SIPTU; Mr. Adrian Kane, divisional organiser of SIPTU; Mr. Bernard Fennessy of the SIPTU national jobs club committee; Ms Ashley Connolly, head of division in Fórsa; Ms Lynn Coffey, assistant general secretary of Fórsa; and Mr. David Orford, Fórsa branch chairperson.

This joint committee recommended in its recent pre-budget submission to the Minister for Social Protection, Deputy Humphreys, that local employment services and jobs clubs be maintained in the current model. As a committee, we appreciate the concerns that a tendering process for employment services could lead to redundancies and the disruption of the service. From my discussions with staff running these services, there is a genuine fear that the person-centred approach of employment services and jobs clubs will be replaced by a purely placement-focused approach, excluding valuable key aspects of existing services like personal development.

This concern comes in the context of two key publications in the last week on labour market scarring, by the National Competitiveness and Productivity Council and the Oireachtas Parliamentary Budget Office. Both have highlighted that the scarring effects caused by the pandemic could have prolonged implications for our economy and result in higher long-term employment and lower economic output.

Some sectors have been harder hit than others over the last 18 months but there is no doubt there will be a disproportionate effect on youth unemployment, as well as impacts on longer term unemployment in the form of a wage penalty, diminished skills, limited career prospects and social exclusion. Fórsa and SIPTU represent over 350 workers employed in local employment services and jobs clubs throughout the country. We will hear their concerns on the proposed changes by the Department.

In our second session, we will have the opportunity to question senior officials from the Department of Social Protection on these changes and get a description of the regional employment service tendering process, comparable results achieved by JobPath, Intreo-based services, jobs clubs and the local employment service, and the reason behind the new phased procurement process.

Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him or her identifiable or otherwise engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore, if a witness's statements are potentially defamatory in relation to any identifiable person or entity, the witness will be directed to discontinue his or her remarks. It is imperative that he or she complies with any such direction. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official, either by name or in such a way as to make him or her identifiable.

Mr. Adrian Kane

I thank the Chair for the invitation to address the committee. As the Chair said, SIPTU and Fórsa represent over 350 workers employed in local employment services, LES, and jobs clubs throughout the country. Our members have provided a professional service to some of the most marginalised people in the State over the last quarter of a century.

The current model has served communities and jobseekers extremely well since it was established in 1995, building relationships with local employers and tailoring its operations to local circumstances. It is our strong belief that the tendering process which has now been embarked upon by the Department of Social Protection is deeply flawed, will ultimately lead to an inferior service being provided and will result in job losses for our members employed through the current processes. We note the committee’s position as outlined in its pre-budget submission and that is very much to be welcomed.

I will summarise the advantages of the current model, outline our concerns regarding what is being proposed via Request for Tender 2, RFT 2, and what we have learned from phase 1, summarise our engagement with the Department to date and put a number of requests to the committee.

Ireland has a mixed economy when it comes to public employment services. Some services, for example, Intreo, are delivered directly by the State. Others, including jobs clubs, employability and local employment services, are delivered by community organisations on a cost-met basis, while JobPath and others are operated by private agencies under payment-by-results contracts. The premise on which the current service provided by community, cost-met providers is based is the belief that unemployed people need help to get back into work and largely would like to work but that they have various barriers in their way to fulfilling their potential via work. The service has assisted many people to enhance their life outcomes and progress to employment and enterprise through person-centred guidance.

There are significant differences between the public employment services procured from private agencies via the market and those delivered by community organisations. JobPath staff are more likely to attribute being on welfare to jobseekers’ lack of effort, whereas LES and jobs clubs staff are more likely to say that it has to do with circumstances beyond people’s control. In other words, the JobPath view of the world is one where the emphasis on motivating the unemployed to move from welfare to work should be through threats of sanctions and other behavioural policy tools. That is not me saying that; it is the finding of an attitudinal study done by Maynooth college earlier this year.

The commissioning of JobPath was one of the first times public employment services had been commissioned in Ireland through competitive tendering for payment-by-results contracts. The Department of Social Protection's decision to procure regional employment services, RES, in a similar fashion is indicative of what is to come via RFT 2. The Minister for Social Protection, Deputy Humphreys, both in Dáil debates and in responses to many parliamentary questions, has stated her Department would take learnings from RFT 1. This first phase was for four new proposed regional employment services. What we have learned is that some of the existing community-based organisations did not believe it was tenable for them to bid for the contract, due primarily to the financial risk that would result to the organisations. That came to pass particularly in the case of Laois-Offaly. Our members employed in these organisations now face being made redundant at the end of the year.

The position of jobs clubs, especially independent ones, is very precarious. That is an issue we can expand upon in our discussion.

The Minister and Department have stressed that there has been significant engagement with the sector to date. It must be noted that the Department only formally met the trade unions, along with the ILDN, on 17 September. We had been advised by Department officials that any engagement offered before this date with the trade unions would be by means of briefings. Although we do not claim to speak for the employers in the sector, we have been informed that this has largely been their experience also. While the Department will point to numerous meetings, the ability to alter and influence direction of policy formation and implementation up to the tripartite meeting held on 17 September has been negligible. At that meeting, the Department officials advised us and the ILDN that the principal reason the Department had embarked on the public tendering process was the necessity to comply with EU law in respect of public procurement. When we asked if this advice would be shared with us the officials informed us that the advice was not shareable. We have not been informed as to what principles of law, EU directives, Acts, sections, paragraphs of said directives or Acts the tendering process is being designed to address. We have merely been told that the Department has received "strong" advice from the Attorney General and Chief State Solicitor that the course of action it has undertaken was necessary in order to comply with EU law.

This has left the union side in an impossible position. We have not had sight of the legal opinion. We are not, therefore, in an informed position to rebut the legal argument. We strongly argue that the legal issues need to be shared, discussed and interrogated. A defence for such a radical marketised approach to public employment services based on meeting EU requirements is, we believe, a dangerous position to adopt. The consequences of such an approach, in other words, laying the blame on the EU for policy formation and implementation, played out to deadly effect in the Brexit referendum. It is not a politically sound approach to public policy formation and implementation in the long run.

I will set out our asks to the committee. We are looking for a stakeholder forum. The trade unions and the ILDN have stated on numerous occasions that they are not against change in the current structure of public employment services. However, it is imperative there is buy-in from all the stakeholders concerned. In recent years, our democracy has become more dynamic and participative. We are a more inclusive republic because of these developments. Citizens' assemblies, plebiscites on establishing elected mayors and various commissions on pensions and tax reform have all been important experiments in deepening participative democracy. We also note the commitment in the programme for Government to develop "sectoral social dialogue". Where better to commit to a process of sectoral social dialogue than in the community sector?

We need to build consensus around the future provision of public employment services. Marketisation of this essential social service does not have popular support, either among the public or their elected representatives. It is necessary to halt the tendering process and commence a wider debate about future provision. We are proposing a stakeholders' forum, comprising community-based organisations, service users, elected representatives, workers’ representatives and academics. The composition and structure of such a forum would ultimately rest with the Government but it needs to be inclusive and comprised of representatives of legitimate interests in the future evolution of public employment services.

On workers’ welfare, SIPTU and Fórsa are the two principal unions which organise in the community sector. Together, we represent in excess of 10,000 workers across the entire sector. Regrettably, although many of these workers are in employments which are, in the main, funded by public moneys, their conditions of employment are typically precarious and they are often poorly paid. We have been engaged in some interminable disputes across the sector. Restoration of pay in section 39 employments is ongoing, pension provision for community employment supervisors arising from the non-implementation of a Labour Court recommendation, which has been outstanding since 2008, is still ongoing, and we have the current dispute involving local employment services and jobs clubs employees.

Our members across the community sector have not received any pay increases over the past 12 years. Many have experienced pay cuts. Few have pensions. Many are on temporary or fixed-term ones. The only viable resolution for endemic precarious employment in the sector is the establishment of a collective bargaining forum with State participation to resolve industrial relations disputes which has the capacity to address terms and conditions of employment in the sector. If the current tendering process proceeds, it will lead to further downward pressure on terms and conditions. That applies even if community-based organisations were to win the contract, such is the precarious nature of the tender being offered. We want to have this structural change and stakeholder forum.

On the reform of the current tendering process, we have outlined our principal objections, the necessity to halt the current tendering process and the need to put in place a stakeholders' forum. However, it is necessary to outline the specific failings from RFT 1 which must be addressed in RFT 2. These issues include the upfront payments to mitigate financial risk, referral numbers, including a mechanism to deal with self-referrals, a dialogue process and time-lines. Members will have seen the lengthier submission we made so I will conclude at this point.

We will now hear from Ms Coffey.

Ms Lynn Coffey

I thank the Chairman and members. Fórsa welcomes the opportunity to address the committee. Members will have seen Fórsa's submission on the public employment services. More than 400 workers are employed in local employment services and jobs clubs throughout the country. As with most community services, Fórsa and SIPTU trade unions have dual representation rights across the sector. The unions have agreed to write individual submissions in an effort to impress upon the committee the grave concerns of our members about the proposed changes in the way the future contracts for service providers take place, without any interventions from all relevant stakeholders. The specific issue is the proposals that the services of public employment services are to be issued through the RFT 2 process.

At present, there are three models in the provision of public employment services in Ireland.

These include the Intreo services, provided by direct employees of the Department of Social Protection and JobPath, provided by two private for-profit companies, Seetec and Turas Nua. In April 2019, the Dáil voted by a margin of 81 to 42 to close this model. It has been extended twice but is due to close at the end of 2021. The third model is a social model comprising the local employment service and jobs clubs. There are approximately 23 local employment services across 82 locations and 40 jobs club throughout Ireland. These are all not-for-profit companies, the majority of which have charitable status.

The existing not-for-profit organisations have provided these services to people within our communities who, for one reason or another, find that they need assistance to engage with employment, either for the first time or when they seek to return to the workforce following a prolonged absence. They provide a wrap-around service designed to assist in every way they can. Their objective is to help people to become job-ready so that there are no cultural, psychological, physical or emotional barriers preventing them from entering the workplace. These organisations support people who are on the live register in addition to providing support to anyone in the community placed furthest away from the labour market. Our members have been providing these services to the most vulnerable in our communities for over 25 years and they have been doing it well. The social model that characterises these services does not require them to turn service users into a commodity to ensure profit margins. The not-for-profit approach allows them to measure their success in terms of meaningful outcomes for service users. That is the model we are seeking to protect because it is the one that works.

Reports cited in the Fórsa submission refer to for-profit models used in the UK and elsewhere which are characterised by lesser terms and conditions for the staff who provide the service. This has the effect of downgrading the services provided by applying pressure on the inexperienced, low-skilled staff to get results, no matter what the outcome. We have seen this happen in Ireland previously with JobPath. At that time, the trade unions opposed its for-profit, payment-by-result model for the provision of public employment services.

Fórsa and SIPTU represent a wide range of sectors in communities. Both unions have consistently highlighted the hazards of putting our community and social services into a for-profit model. Turning the services and service users into a commodity has been proven, time and again, to be simply unworkable. Our message to the committee today is that we must put the service users first, particularly at this time when the pandemic has inflicted so much damage on the labour market, as the Chairman alluded to in his opening statement.

As stated by my colleague, what we are seeking from this committee is that due consideration be given to our statements and the proposed tendering process paused. Without a predetermined outcome, we are asking the Department to engage in a meaningful and inclusive way with representatives from the service providers, the service users, the employee representatives and academic experts and that this is done with an ethos consistent with the social platform.

I thank the witnesses for their attendance. The committee has looked at this issue over many months. I have received a lot of communication and correspondence on it, particularly from the Ennis-based jobs club and people working in the local employment service in Limerick. It is an emotional issue because the services provided are person-centred and have delivered results on the ground. I empathise with the witnesses' position and support it. I note their concerns in relation to the legal situation around this and what they have been advised. We will certainly ask officials and the Minister about that.

I ask Mr. Kane to expand further on the situation in Laois-Offaly and the predicament in which the service found itself in not being in a position, legally, to submit a tender. I ask him to explain why the service felt it could not submit a tender in the context of financial risk.

On the issue of pausing the tendering process and conducting a dialogue with all of the stakeholders, what would the trade unions bring to the table to make the tender process more workable from a community perspective? What would make it more workable? The witnesses said the unions would like to see a uniform system across Ireland as some counties do not currently have these services. What would make the tender process more workable for the witnesses?

I invite Mr. Kane to respond first and then any other witnesses who wish to respond may do so.

Mr. Adrian Kane

I will deal with the first part of the Deputy's question and then I will ask Mr. King and our colleagues from Fórsa to respond to the second element of his question relating to reform. The community-based organisations in Laois-Offaly did not believe they were in a position to tender because of the construction of tender one, the financial risks that would befall the organisations and the capital that was needed, in terms of money upfront, to provide the service. They took the decision, having been in that space for in excess of 20 years, that they could not continue because they were not in a position to submit a tender. Some other organisations took a different decision but the Laois-Offaly organisation believed it was not in a position to apply for the tender. These are experienced and professional people who have been providing the service for over 20 years.

I ask Mr. Kane to explain the issues involved in detail. He referred to upfront capital. Will he provide more detail on that?

Mr. Adrian Kane

I will defer to one of my colleagues on that because, at the end of the day, they were employer decisions. I will ask my colleague, Mr. Fennessy, who works for an independent jobs club, to explain why that decision was made.

On the question of reform, it is important to note that our principal request is that this process be halted. If it is not halted, we will be left in a very difficult position. I am sure the Department will tell committee members that it is in a tendering process and cannot have formal consultation with us and community-based organisations because it may disadvantage private parties who are interested in the tender. We are caught in a bind. Whatever discussion we have, if the playing field is left unaltered, will be very limited. That is what members will hear from Department officials when they appear before the committee. I do not believe the timelines for a new tender for the new year can be met, so why not roll over for a long period? That would allow us to have a deeper engagement than we have had to date. I will ask Mr. King to respond on RFT 2.

Mr. John King

Deputy Carey asked why some of the existing providers did not tender, what were the restrictive pieces around that and why we think that will play out even more significantly in tender two. We have told the Department that we believe, on the basis of current trajectory, that we are heading for a crash here. The result of that crash will not deliver for the service users or the staff and will result in significant job losses and redundancies.

I know, following extensive engagement with workers and individuals at chief executive level in some of these companies, that they do not have confidence that the proposed tendering process is going to work. The Department will say that they can all tender.

That is true, but the difficulty is they cannot tender because of the restrictive pieces around the tender, particularly financial. If you imagine somebody who has just recently been made unemployed and who goes into an Intreo office, if that person is highly skilled he or she is likely to be employed pretty quickly because they have got the skill set. A payment model based on getting that person a job might deliver finance. Following being in Intreo for a while, that person will then go to a private provider who will get a second opportunity. If that provider finds a job for the person, it will get a financial capacity. The LES and jobs clubs providers will get, for want of a better word, a third layer and they are the people most distanced from the market. They will be the clients and service users most in need of support to become employable. A financial model only based on giving State support when a person gets a job will not deliver the finances to make those companies sustainable. That is why they will not tender. We will have many areas that will not tender. We may have some areas that will tender but they will have to cut their cloth so significantly that the effect of the tendering will mean they will have to shed many jobs in many areas. Those are the significant pieces around why there are concerns about it.

Mr. Kane mentioned this situation will lead to a transfer of risk from a net cost basis to a payment model. What do we think will happen? Mr. Kane mentioned we are very close to the end of the year. The new model is supposed to be in place on 1 January next year. We think the Department should pause this process to allow significant time for the stakeholder engagement piece we mentioned so we can try to build confidence within the existing providers to be able to make sustainable tenders. It would be an absolute nightmare scenario if companies tendered, realised five or six months later that they were no longer sustainable and are forced to wind up. Apart from the fact people would be made redundant at that stage, large parts of the country would be abandoned and would have no employment services at all. We would like to use the time within a pausing of the process to design a system that works for the service user and the State, and allows for elements of private sector involvement, but protects that piece, which is an essential base for the community provider vis-à-vis the local employment service and the jobs clubs.

I thank Mr. King. Has Fórsa a response?

Ms Lynn Coffey

We do. With regard to the Deputy's question on uniform access throughout the country, that is what RFT 1 has brought. It brought some agencies into parts of the country where they did not previously exist. We were told at the time that they were brought in on a green site, but it turned out there were some jobs clubs that suffered because of that. Those jobs clubs have now closed because they could not tender for that process. We have lost more than 180 years' worth of experience brought by the people working within those jobs clubs. There were eight people altogether, with not less than 20 years' experience each, working within this area in helping people who are the most vulnerable and most removed from the labour market, enabling them to get back into some form of work and assisting them in getting to that goal.

At the moment, as we come through the pandemic, we will have unemployment scarring, especially with our youth. As my colleague, Mr. King said, if we continue this way, the LES clubs, which at some sort of stretch or another tendered for these contracts, will no doubt end up not being able to continue within a year to 18 months. They will not be able to provide the service to the standard they currently are, they will not be able to hold existing staffing levels, they will not be able to retain staff at the professional level they exist at the moment because there will be better-paid jobs out there that these people will be able to go to.

Studies have shown that, under the for-profit model, staffing mainly comes from low-skilled, retail workers who end up trying to deliver these services as best they can, through no fault of their own. It is the wages they are paid, which are really a race to the bottom. When it comes to our most vulnerable people, we cannot stand by and allow the risk of more of them falling between the cracks as we go forward in 2021 because the Department has adopted a mindset that it will not engage with the stakeholders. That is imperative.

As my colleague, Mr. Kane said, the date was meant to be 1 January 2022. We will not see that date. It would be crazy to push it out by another month or two. Let us take this time, let us invest in this and let us invest in the people we need to look after. That is the kind of country and society we are. My colleague, Mr. Orford, would like to have a word on what I was saying.

I will let Mr. Orford come in later because there are six members who wish to contribute and we have 24 minutes. I need the witnesses to give brief replies when they are called again.

I have three very quick questions. I thank all the witnesses for attending. During the meeting that took place with Department officials last week, which was the first time they met with the trade unions, was it acknowledged there would be job losses? Was that acknowledged by officials at that meeting? Were the trade union representatives left with any hope as regards any changes or learnings to be taken from the first and second tenders?

I presume a major barrier to existing local employment services and jobs clubs even clubbing together to go for this first tender was the annual turnover requirement included in that tender. The witnesses also mentioned upfront costs. Given that many of these companies have charitable status, was the turnover requirement raised as an issue? While the Department has mentioned quality and reputation, companies are disqualified immediately if they do not meet that requirement and that is a gamble for many of them.

We will start with Fórsa followed by a representative from SIPTU.

Ms Lynn Coffey

When we met with Department officials last week there was an acknowledgement that there would be job losses as a result of this tender. There did not seem to be much hope, or thought, at all for the people who had provided this service for the past 25 years and who had invested so much of their time into the communities.

On the existing LES and the annual turnover issue, the companies have charitable status and will not have the money upfront to go forward for tenders. I said that previously. In an effort to keep it quick, I will not rehash what I said.

Mr. Adrian Kane

To briefly respond to the Deputy's questions, the answer is "yes", as my colleague from Fórsa said. The Department officials expect job losses and they admitted that. They are prepared, and certainly would have signalled to us, for some movement on referrals, access, moneys upfront, etc. The point I will stress to the committee is that we find ourselves in the position that unless this process is paused, halted and existing contracts are extended for a rollover period - a year would be reasonable - any further engagement we have with the Department will be on the basis of it stating that the tendering process is at play and it cannot engage with us in any significant way because it is in that tendering process and it could disadvantage private sector concerns.

That is the difficult bind. I have no doubt the argument that will be repeated ad infinitum when the committee hears the Department's side of the story is that it is too late to engage and, in any case, did officials not speak frequently with the unions. They did not. There was no sense of parity of esteem in the development of this. We were talked down to. In meetings attended by the trade union side, we were told in no uncertain terms by the Department officials, up to the meeting of 17 September, that they ere briefing us and telling us what was happening but they were not giving us an opportunity to influence the process.

I will be brief because a number of other members wish to contribute so time is of the essence.

I support the case being made by the trade unions because I believe we need the local employment service. Why do we need to change something that has worked well for 25 years? As the Department has said, there are procurement issues. My colleague, Deputy Kerrane, mentioned that there is an issue with procurement in many areas. The size of tenders is a major issue for smaller organisations which are not able to meet the criteria.

In Roscommon-Galway, where I come from, the local employment service is necessary because people always fall through the net. There is no question that people will fall through the net and be left behind. I cannot emphasis enough how important this service is in counties such as Roscommon and Galway.

Some people can go for interviews and fail time after time. They may be intelligent and good workers but they just cannot get through the interview process. The local employment service is very important in that context. If we are to treat all the children and people of the nation equally, we need to ensure the service continues.

There is obviously an issue with redundancy costs. My information is that these costs could run to between €10 million and €12 million. In their conversations with the Department, have the trade unions raised this issue and, if so, what has been the response? Redundancy is a significant cost that must be taken into account.

Another issue is that this service is provided by local groups in the charity sector. The new process does not suit them and they cannot apply for the contract with the change that is proposed. The main issue is redundancy because I understand it is a major cost factor.

Mr. Fennessy will respond first, followed by a representative from Fórsa.

Mr. Bernard Fennessy

I am the chair of the national jobs clubs committee. I am also a jobs club facilitator and I operate on the ground. I am also representing my local employment service colleagues.

The model that has been proposed for dealing with long-term employed will not work. People are long-term unemployed for a reason. While the contract states this will be a four-year contract with a review after three years, really you will get a year with a long-term unemployed person. If unemployed persons have come through all the different sections already, there will be a lot of unwinding required for them before we can get them focused and back into what should be sustainable employment. We have 25 years' experience in this area and we know the model provided will not allow us to achieve turnaround in that time. From that point of view, this model will fail to deal with people who have been unemployed a long time for a reason. It takes time but it has been proved again and again that if you put time into these wonderful people, you will get the turnaround. The bottom line is that the barriers are so deep that it would be impossible for us to work with them in that way.

The people on the ground who deliver the service have never been asked by the Department how to run the service. Would it not make sense to ask the people on the ground with 25 years' experience how to put a better service together? It strikes me that the Department did not ask us for a reason, that being it would not get the answer it wanted.

I thank members for their backing but we need people to listen and we also need an all-inclusive engagement.

Mr. David Orford

I will address Senator Murphy's question around redundancy. I work for a local development company in the north Dublin area. We have been operating a local employment service and a jobs club since 1995. We have approximately 28 staff working between the jobs club and the LES. Many of them have been with the company since the beginning. They are highly-skilled and highly-experienced staff. I recently asked our financial controller to work out the cost of statutory redundancy if we did not procure a contract and if we had to make our staff redundant. The cost was €302,000. We do not have money to pay that. The Department has never allowed us to build up a reserve for redundancy or for any other emergency costs. The attitude of the Department seems to be that it is not the employer, it is not its problem and it is for us to sort out. The cost of redundancy is a very serious concern. If we take account of all the local employment services in the country, it amounts to a substantial sum of money. There has been no guidance from the Department on how this is to be addressed.

Mr. Adrian Kane

May I add to that?

Mr. Kane can respond if there is time at the end of the meeting. We need to allow members to contribute.

Mr. Adrian Kane

That is fine.

I thank the witnesses for appearing and laying out the reality on the ground for workers and the local employment service. Members of the committee have raised this matter with the Minister a number of times, including through parliamentary questions in the Dáil. She repeatedly comes back with the argument on EU procurement rules and states the Attorney General has copper-fastened this. It will be very difficult to push this along. I will support the call for a pause. The Minister will be before he House to take questions next week. I am sure members will table questions on the issue and apply as much pressure as much as we can.

The number of workers involved, at approximately 400, is not significant from the point of view of having an impact on the Minister. What are the unions doing in the area of industrial relations to apply pressure to the Minister who seems to be gung-ho about implementing this proposal, even though we have raised the issue of EU procurement rules with her?

Ms Lynn Coffey

I thank Deputy Joan Collins. I agree the Minister appears to be gung-ho in going forward with this. When it comes to EU procurement, there are other social models. I referred in my submission to the social platform. We have asked for a stakeholder group to be established and we are seeking to have that done with the ethos of the social platform, which allows for social services. There are particular provisions in place for the delivery of contracts for social services.

Deputy Collins noted that the workforce of 400 is small. It is important to note that this small workforce has delivered very effective outcomes. The local employment service was set up under partnership in 1995-96. The number of people it has helped and brought through cannot be measured because there is no profit margin to measure it. We do not need a profit margin to measure it. However, we can see the difference it has made in the areas and communities in which we live, particularly underprivileged areas.

The Minister has cited EU procurement rules and the advice she has received from the Attorney General. As my colleague stated, this makes it very hard for us because the Minister is not willing to share that advice with us. How are we meant to understand what the Minister is saying if she will not share the information?

Mr. Bernard Fennessy

Jobs clubs were completely dropped from the equation with this new tender. They do not appear in the new tender. They were just dropped. To give the members an idea of value for money, the average person who is unemployed earns approximately €10,000 a year in social welfare payments. The dearest jobs club probably costs €150,000. The maths are simple. The cost of the jobs club is covered by 15 people being placed into full employment. Everything else represents a positive return to the State. Across the country, jobs clubs, with their local employment service colleagues, have consistently delivered value for money. Despite this, jobs clubs were dropped from the equation. Independent jobs clubs were told to go to the local development company or partnership and ask whether they could be taken on board. These bodies cannot even make the figures match up for their own LES colleagues, never mind adding on a jobs club. Why would such a cost-effective model be dropped? That is a question that has to be asked. It makes no sense.

I will pool the contributions of the last three members indicating before seeking a final response from each union. I will call on Deputy Paul Donnelly followed by Senator Wall and then Deputy Flanagan.

I thank the trade union representatives for their attendance and the way in which they explained how important the services are. It is very important that we try to get that message out there. The services are important for the workers, particularly those in Empower in my own area whom I met quite often, including at their recent protest. I fully support the pause to provide an opportunity to hold a stakeholder forum.

Regardless of what the service is, all services can be improved. I was listening to "Morning Ireland" this morning and Jenny from the north inner city, the area where I was reared, was speaking. The message she delivered about how person-centred services can make great differences is very important. It is about placement through the service but it is also about follow-up to ensure that people who are feeling a little bit nervous or rattled about what is coming down the line for them can pick up the phone and talk to a person who genuinely cares about them. I do not believe a profit-led private service can deliver that type of service to people. It is important that we do not criticise those who work in these services, as was mentioned. They are put under pressure to deliver and to get people in and out quickly so that profits can be maximised. That is absolutely outrageous.

It is also ironic that the Government and Minister are hiding behind the Attorney General's legal advice. I have requested that the committee seek advice from the Office of Parliamentary Legal Advisers, OPLA, our own service, and that has been agreed to. That will be critically important. Let us also remind ourselves that the Attorney General released advice regarding the Merrion Hotel issue, so there is precedent. Advice can be released when it suits the Government. Have the trade unions sought legal advice on this matter? What is the legal advice with regard to public procurement? The Government is claiming that it is necessary for these services to go out to a public tender.

I welcome the representatives of both unions and thank them for their comprehensive assessments and presentations and for their support for the employees in our jobs clubs and local employment services. I am acutely aware of the great work they do. I deal with them on a daily and weekly basis. I am very much aware of the cost model involved and of the problems regarding a payment-by-results model. I deal with that issue as well, unfortunately.

I will concentrate on the meeting with the Department on 17 September. My issue relates to the 25 years of service that others have mentioned and the relationship with local employers, which is critical to this service. In the discussions with the Department, was there any discussion of the social benefit or social contract that may accrue from these services and which may be lost? Have any other countries gone through this and found that the social benefit outweighed any EU directive? That is a very important argument and one that we may have with the Department in the next hour. Will the two unions reply to both of those questions?

I thank our witnesses. I do not see too many Government members here. I would be very happy to convey the importance of this meeting directly to the Minister today. I take it the Chair will be preparing a report to inform the Minister of the matters that have arisen and the information that has been given. If the Minister has legal advice, it is important and only fair that it be shared, regardless of where it comes from, because it seems the Government is relying upon it.

Mr. John King

Deputy Joan Collins asked whether we had done anything industrially in the way of protest. It is fair to say that we have. We have balloted for both industrial action and strike action. These motions were carried overwhelmingly. We reserve the right to take such action if all else fails. We have had a couple of protest campaigns and we intend to keep them going. We have been seeking a meeting with the Minister for the past 18 months. The first time we sent the Minister formal correspondence was in February or March 2020. We have not been given a direct meeting with the Minister. We have had an engagement with the Department, which has been referred to. Had we had a meeting with the Minister, we would have been able to explore the policy element, that is, this issue around the legal advice and so on. However, when we talk to Department officials, we are told the policy decision has already been made. We are trying to influence that policy to try to make it look as good as possible.

As to whether we have sought our own legal advice, we have not yet done so. That is one of the reasons we want to see the legal advice being relied upon. That would give us an opportunity to focus any advice we might seek.

Senator Wall asked about the issue of social benefit. We have put that loudly and clearly to the Department officials and in various correspondence with the Minister. We believe that some of the European legislation on procurement allows for states to be flexible when considering social policy initiatives, developments and so on. The timeframe has been paused as we look at this and we believe that there could be scope to arrive at an amicable solution that delivers for the State but also for the employees, the existing providers and, most importantly, those who will require local employment services and jobs clubs in the future. We appreciate Deputy Flanagan indicating that he would bring the issues raised in this most important meeting to the attention of the Minister.

Ms Lynn Coffey

There is not much more I can say that Mr. King has not already covered. On the question regarding seeking our own legal advice, as I stated, it is very hard for us to see what the Minister is citing as legal advice when she will not share it with us. I thank Deputy Donnelly for noting that there is precedent for the sharing of advice in the other case he mentioned.

We were asked whether this procurement issue had arisen in other countries. In Belgium, ways to deliver social service contracts have been developed that are acceptable to EU legislators. This relates to cleaning services and so on as well. Social services in these areas have been allowed to continue delivering services. There have been situations in other countries within the EU in which the EU procurement legislation has allowed people living in those countries to benefit.

I will go back to what Mr. King said about the social benefit. Did we impress this point on the officials at the meeting on 17 September? We most certainly did. We informed the Department of the relationships that have been built within these communities over a 25-year period and which took a long time to establish.

They are established. They are walk-in centres for people. As Deputy Donnelly said, it is about being able to lift the phone and do follow-ups. It is about being able to have a conversation and ask people how they are getting on, how they found an interview, how the service can help them to go further and if there is anything else they need, including further training. The private model will not provide this because these are not the results the private model is looking for. The only result the private model is looking for is profit. In the social model we are looking after people.

I thank Ms Coffey, Ms Connolly and Mr. Orford from Fórsa and Mr. King, Mr. Kane and Mr. Fennessy from SIPTU for their evidence.

For the second part of the meeting, we are now joined by officials from the Department of Social Protection to consider the local employment services. We have with us Mr. Niall Egan, assistant secretary, and Mr. Chris Kane, principal officer. They are both very welcome.

Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If a witness's statements are potentially defamatory in relation to any identifiable person or entity, the witness will be directed to discontinue his or her remarks. It is imperative that he or she complies with any such direction.

I invite Mr. Egan to make his opening statement on behalf of the Department of Social Protection.

Mr. Niall Egan

I thank the Chairman and members of the committee for the invitation to today's meeting and to address the committee on the Department of Social Protection's plans for employment services. I am joined by my colleague, Mr. Chris Kane, principal officer in the Department's contracted public employment services unit. We provided the information requested by the committee in advance of today's meeting and are happy to clarify or elaborate on any matters of interest or concern the committee may have.

As members will be aware, the Department of Social Protection provides a wide range of income supports and other services to people across the State. This includes the provision of the public employment service, which supports individuals in transitioning into employment, upskilling or securing alternative employment opportunities. The public employment service is delivered through the Department’s Intreo service comprising its own staff working in Intreo centres, together with our external service partners, including the local employment service, jobs clubs, JobPath service providers and Employ Ability.

Support is delivered through Intreo case officers and our service partners engaging with individuals on a one-to-one basis to identify their requirements, their skills gaps and suitable education, training or employment opportunities. All of these services also work with employers to promote recruitment of people from the live register, people with disabilities and members of other groups. The goal in all this activity is to support people make a successful transition from welfare to employment, either directly or by progression through training, education and employment schemes such as community employment and Tús.

The Department recognises the valuable work of all its service partners in assisting those who are unemployed to transition successfully into sustained full-time employment. However, the employment services currently delivered by the local employment service and job clubs are not available nationwide. In areas where these services do not exist individuals have fewer employment service options.

Earlier this year, the Government published its employment services strategy, Pathways to Work 2021-2025. This is a comprehensive strategy consists of 83 commitments with the aim of reducing long-term unemployment, reducing youth unemployment, improving labour market transitions and ensuring better labour market outcomes for all. Crucially, it contains commitments to expand the caseload capacity of the public employment service and maintain the resource capacity of contracted service provision, while increasing the resources to deliver a regional employment service nationwide.

In late 2019, the Department commenced a review of the public employment service delivered by Intreo and our service partners. This review built on several earlier reviews conducted by Indecon consultants separately into both the local employment services and job clubs, and by the Department in conjunction with the Organisation for Economic Co-operation and Development, OECD. As part of the review of the public employment service, the Department engaged extensively with all service partners both collectively and separately and with their representative organisations. Separately, the Department engaged external consultants, the Institute of Economic Studies and the Social Finance Foundation, which consulted the Department’s existing service partners.

Following on from this review, the Indecon reviews and in line with the commitments in the Pathways to Work strategy, the Department is making some changes to how it contracts external services, including those currently provided by the local employment service, jobs clubs and JobPath. The contracts for all of these services end for new referrals at the end of this year. This provides an opportunity to implement changes arising from the review process. It also enables the Department to place the services on a proper contractual footing. The existing arrangements for the local employment service and jobs club services extend back over 20 years, with no formal procurement taking place in this period. This is in contravention of good governance and public procurement practice, a fact that has been commented on by the Comptroller and Auditor General. The Attorney General has also advised that these services must be procured in line with EU and national public procurement rules by means of open and competitive tendering processes.

The Department has, therefore, commenced a phased procurement process which, based on the review undertaken, will see the delivery of a new national employment service and a multi-lot regional employment service to consolidate existing local employment services and jobs clubs and extend the new service nationwide. The aim is to ensure that, as set out in Pathways to Work, there is sufficient employment service capacity across the State to support those who require access to employment assistance and advice. These new services will deliver a more integrated customer journey between the Department’s Intreo service and that provided by its service partners; deliver a consistent range of employment services to customers nationwide; target specialised resources at individuals who are furthest from the labour market and require access to a wider range of supports and services for longer; provide employment services for a range of cohorts; and comply with EU and national procurement law.

The Department recognises that these changes are of concern to all existing service providers. For this reason, the Department is anxious to ensure they are implemented in a careful and phased manner that, while being compliant with procurement rules, enables us to build on the existing capabilities of the service providers. The phased approach, using a limited first phase tender, is also intended to enable learnings to be taken and incorporated into a second phase of procurement. The Department commenced this process with the procurement, via a request for tender, RFT, of the regional employment services in four geographical lots in the north west and midlands, across seven counties, none of which currently has a local employment service. In designing this RFT the Department, based on feedback during the review, prioritised community and social linkages as a key criterion and set pricing parameters that, for example, guarantee service provider income in respect of a referral of a guaranteed number of clients each year. This phase 1 procurement is still ongoing and nearing completion with the successful bidders to be announced shortly.

The Department is committed to considering the experience arising from the phase 1 procurement in preparing the request for tenders for the remaining lots for the regional employment service under phase 2 of the procurement process. We are also in ongoing dialogue with the various service providers and representative groups, including staff representatives, and will consult further with them before finalising the phase 2 procurement.

One of the learnings we have already taken is that providers are exploring ways to work collaboratively to provide high quality service and coverage as part of the service consolidation. Accordingly, to enable providers sufficient time to explore these options the Department is reviewing the timelines for the completion of the roll-out of the regional employment service procurement. Towards this end and to ensure continuity of service to our clients, it is intended to extend current contracts in the phase 2 areas for a short period into next year. The request for tenders will issue prior to the year end and we will write to all providers shortly outlining the revised phase 2 procurement timelines.

I have set out briefly the Department’s approach to the provision of employment services and how the current approach seeks to deliver the Government’s Pathways to Work commitments, while ensuring that high-quality employment services are procured in a manner consistent with procurement law. My colleague and I will be happy to address any queries the committee may have.

I thank the witnesses for appearing. A number of issues arise, including the legal advice received by the Minister on this issue. Will Mr. Egan please go back over that and explain what legal advice the Department received requiring it to bring these services to tender?

Can the phase 2 tender be framed in such a way that local community service providers will get priority and secure the contract? How is it pitched? Is a local community's track record included as a high-scoring criterion in the tender?

The tender needs to be designed favourably in respect of the local organisations given their long track record. Can Mr. Egan confirm whether this is the position? Has there been dialogue around that?

Mr. Egan maintains there is significant dialogue between the Department and the various stakeholders, but the latter are telling us otherwise. They want meaningful engagement and a stakeholder forum. Is the Department open to engaging in a more meaningful arrangement? That is what the stakeholders want. They want to come to some sort of agreement with the Department in order that they can move on with something workable for both sides and the employees and clients.

Mr. Niall Egan

We have sought extensive legal advice from the Chief State Solicitor's office on several occasions and it has also come through the Attorney General's office in more recent times. The legal advice is based on the EU Directive No. 2014/24 on procurement. It is clear that due to the employment service provision that exists in the market for the provision of employment services to the long-term unemployed, there is a mixed market in play. On foot of that, there is a requirement that all services, when they come up for renewal, have to be contracted in an open and competitive tendering process. We have looked at specific issues in the directive to see whether certain exemptions apply for services of general economic interest. The advice we have is they do not apply in the context of the services provided by the local employment services.

The Deputy raised phase 2 of the RFT and whether local service providers can get these contracts. When we go to a procurement, it has to be open and competitive. Any interested bodies in a position to bid have to be able to bid and to do so fairly. That is important from a procurement perspective. There has been extensive engagement with the sector over several years, going back to 2018. On that basis, we have visited every single provider and asked all the providers what unique services and offering they provide. We are aware of the important services the local employment services and jobs clubs provide. We are aware they provide great linkages into the existing communities and have a proven track record with those linkages. Therefore, we developed the tender under phase 1.

From the Department's perspective, we could have produced a simple tender, based on costs. We do not do that. It is a most economically advantageous tender process. Quality is very much weighted, with 75% of total marks going to quality. Of that, 23% goes to social value, proven track record on networking and building relationships and the important role of building services that wrap around the customer. Given the proven track record some of the providers have, they should be in a strong place to tender on those grounds.

In terms of meaningful dialogue, we have had extensive engagement with the sector. We had a meeting on 17 September. There have been four meetings between SIPTU and senior departmental officials, three of which predated the September meeting. Since 2018, we have had constant engagement with the Irish Local Development Network, which has been briefing its members on foot of the engagements we have had. In addition, we have also liaised and consulted with the non-affiliated ILDN members, such as the independent jobs clubs and the three local employment services not affiliated with the ILDN.

Will Mr. Egan commit to re-engaging in a stakeholder forum, as has been requested?

Mr. Niall Egan

As I said, the Department will engage with each of the representative bodies prior to publishing the request for tenders for phase 2. We are committed to learning from the phase 1 process and we will amend or tweak the RFTs for phase 2. We have committed to engage with all relevant stakeholders prior to the publication of that RFT.

Does Mr. Egan acknowledge that the model outlined in the first tender ends the community-based, not-for-profit model that has existed for 25 years and also that the Department is closing the door to walk-ins? Mr. Egan cited two pieces of legal advice on the obligation to tender in the first instance. If he cannot share or is not willing to share either of them, will he share what the Department sought when requesting that legal advice? What was the question asked? If we take it that this unseen advice is exactly as Mr. Egan says, then why not maintain the current model? It has been said repeatedly that the local employment services and jobs clubs do not exist everywhere, but there was no reason or obligation for the model having to change, through procurement or otherwise. If we take as read Mr. Egan's position on the legal advice and the need to tender, why change the model? Why move from the community-based, not-for-profit model to an entirely different model?

Mr. Egan place a major focus on consultation and engagement. During that process, did staff suggest a change in the model at any point over the years? Did they suggest we end the service for walk-ins, wrap-around services and the community basis of the service?

The tender appears to totally disregard jobs clubs. I know from engagement with jobs clubs in Ballaghaderreen and Ballinasloe in my constituency, they feel totally disregarded. A tender has been issued which does not mention them and almost leaves them to one side. They have been left in a vulnerable position. These workers, highly-skilled and educated people, have given years of service to people in my constituency, including vulnerable people in Ballaghaderreen and Ballinasloe, and they are being left to one side. It is regrettable how they and staff throughout the local employment service and jobs clubs have been treated. I wish a conversation had taken place with them earlier on what exactly would happen at the end of this year.

We know from the unions and staff on the ground that some local employment services and jobs clubs were not in a position to tender because in some areas they do not have an annual turnover of more than €1 million. Mr. Egan stated that quality is a major focus ad will account for 75% of the weighting. However, an organisation that does not meet the annual turnover requirements in the first instance is eliminated before the issue of quality is addressed. While the focus is being put on quality, the financial constraints on these organisations, most of which have charitable status, means the Department is purposefully locking them out by basing the tender, in the first instance, on cost.

Mr. Egan cited the external review of contracted employment services. That work was done by a university in Bristol. Has it been published? If not, we are basing all of this on unseen legal advice and an unseen external review on contracted services and we are supposed to just take Mr. Egan at his word on both.

Mr. Egan also stated it is hoped the service will provide employment services for a range of cohorts. We know those obliged to engage in employment services are jobseekers. How will the Department widen that and is that its plan?

The document before us features a table showing the number of people who have taken up employment through JobPath. Clearly, the only outcome that is taken into account when the Department looks at local employment services, jobs clubs and JobPath is a job. Any job is the basis of the outcome. Does the Department count referrals to labour market programmes, training and education or part-time employment across the board, or is it just a job?

Mr. Egan indicated that 70,740 people had found employment through JobPath. Is that sustained for more than one year? I imagine it is not. The table on page 12 is quite misleading. Will Mr. Egan explain the difference between JobPath and what is being proposed under this first tender?

Mr. Niall Egan

I do not acknowledge or agree that the model we are proposing closes the door on the community and voluntary sector.

We are trying to build a model that is designed to keep the best of what we have in the existing employment service providers. It will be a national employment service model with a designated area to provide greater flexibility and scope as economic circumstances change, and it will be a regional employment service model specifically designed to focus on supporting those furthest from the labour market. We acknowledge that cohort requires a different service, and in many cases, as a previous speaker said, 12 months is not sufficient. In the model we have proposed, it is possible to extend the length of engagement up to 18 months. There is additional time because we know the individuals we are dealing with are farthest from the labour market. We are also building into that model recognition of the importance of the existing network for delivering access to other State services to build a wrap-around service for jobseekers and other cohorts. It is important to acknowledge that.

On the question on walk-ins, the Department through Intreo already takes in walk-ins across the board. In any area where there is an existing local employment service, that already happens. In cases where local employment services exist, we deal with walk-ins as well. We are adopting a model that is close to the Employ Ability model. Any individual who seeks access and support to employability, whether he or she goes to the local employment service or jobs clubs, will be referred to Intreo which will do an assessment of the individual and, if appropriate, send him or her to the correct employment service provider. We believe in the regional employment service, that if the individual is far from the labour market, he or she will be referred back to the regional employment service model.

We are changing the model because there are serious problems with the fixed-cost approach we have on an annual basis. That was expressed to us in consultations we had with the sector. The existing model requires us in the Department and the providers to verify every euro spent on overheads. There is very little flexibility for providers to innovate in the model or to have security in terms of multi-annual budgeting. We are changing the model in that regard. We are enhancing key performance metrics in the model to make services comparable. We cannot at the moment compare services across the board between different employment service providers. By the end of this process, we will have that comparability and be able to identify far quicker than we can at the moment service providers who are struggling to support the individuals, whether through progression or placement into employment.

We consulted every provider extensively. In many cases, staff members participated in those meetings with officials, but not in all cases. Members of the board or management were involved in those meetings as well. The Institute for Employment Studies, which we got in to help us build the future model, consulted nominees from the sector without the Department being present. We wanted a true, proper engagement for them to speak their mind in relation to consultants.

On jobs clubs, the services they provide are included in the request for tenders under phase 1. It is important to acknowledge that. It is true, given the areas we are covering in multi-county lots, essentially two counties, that there is a significant difference in what the regional employment service is delivering. It is an intensive employment service engagement for 12 to 18 months. A jobs club that provides services between one and four weeks for a small cohort would have problems in terms of scaling up. We have, therefore, since 2018 and when we published the Indecon reports, informed all jobs clubs and local employment services of the need for them to come together and work collaboratively on a future tendering process. That is clear and it ties in to the Deputy's question on annual turnover. She is correct to point out that the annual turnover, in the request for tenders under phase 1, is a minimum requirement, but we accept any similar contracts, whether they be community employment, Tús, the social inclusion and community activation programme, SICAP, or the existing contracts as proof and if they combine with other service providers. A jobs club and a partnership working together should and would be able to meet those annual turnover requirements.

The Institute for Employment Studies, I think, is the external review the Deputy referred to. That review has not been published yet. It contains information we are using on pricing and lot sizes. It recommends a considerable consolidation of the lots, particularly in the Dublin area. In the Dublin area it proposes a consolidation of three lots. At the moment we have 12 local employment service providers. The Department is carefully considering that because we are aware of the difficulty that having three lots in the Dublin area, which would be Dublin north, Dublin south and Dublin central, would pose to existing providers. We are actively looking at that.

The request for tenders under phase 1, it is important to say, had scope within it to provide and send non-long term unemployed jobseekers in relation to it. It is described as other cohorts. There is a pricing structure relating to that for providers. They are informed of the level of resources the Department would provide for that. From the Department's perspective and in accordance with the commitments contained in Pathways to Work, we want to build an employment service that gives the Department flexibility to support people with disabilities, lone parents, carers or other individuals. That mechanism is placed within the existing request for tender and we see that continuing into the second phase.

I will ask my colleague, Mr. Kane, to talk about the JobPath referrals. On the Deputy's question regarding the figure of 70,740, that is total employment from JobPath. The figure for sustained employment for a 12-month period is approximately 24,000.

The Deputy asked about the difference between the model of the regional employment service and JobPath. They are very different models. In the JobPath model the only guaranteed income is a referral fee of an average of €311 per individual referred. They have to engage with that person for 12 months, that is 52 weeks, irrespective of whether that person progresses into employment. Any subsequent payment is only made if the person secures sustained employment at 13-week intervals. The model we have for the regional employment service pays 90% of average fees based on a starting and an engagement process. That engagement process is about progressing and tailoring a service that is unique to the individual. That may include access to education, training or, as I said in the opening statement, employment support programmes. There is a 10% performance incentive if that person can be progressed into employment thereafter. It is almost the inverse of the JobPath model. I ask Mr. Kane to contribute.

Mr. Chris Kane

I am not sure how much I can add. The Deputy asked about the 70,000. The table clearly states it was job starts. The committee asked for comparable stats. The difficulty is the comparison. It is difficult to present. The stats for each of the services are compiled differently because performance in each service is registered differently. We do not compare them across. With JobPath, what counts is somebody gets and sustains a job. We track that person through from the date he or she commences the service. Local employment services do not do that. It is much rawer in calculations.

With those tables, we were trying to present job starts. For the local employment service, jobs clubs and Employ Ability, the only thing we really record is job starts. We do not track the person or how long he or she stays in the job. That is what we do in JobPath and that is what we hope to do in the revised regional employment service. I am happy to go through the stats for JobPath if the Deputy wants.

Deputy Kerrane has raised two important points. The first is the independent evaluation. If the full report cannot be given to us, the committee would like a copy of the report with the commercially sensitive information redacted from it. The impression has been given to members and groups throughout the country that they can tender for the process but, with the €1 million turnover limit and the objective of amalgamation or reconfiguration, clearly that is not the case and that is new information to the committee.

Unfortunately, I missed the first part of the meeting as I was in the Dáil on Topical Issue matters. I would like to take a wider look at this issue. We can talk about the service providers, but we need to look at the requirements of the people we are trying to serve. Will Mr. Egan tell me what was the lowest number of people who were registered as unemployed at any time, say, since the year 2000? In other words, during all the boom times, when jobs were readily available, what was the lowest number of people registered as unemployed we ever got to? I am not talking about the live register, which is a different issue. I am talking about people who were registered as unemployed.

Mr. Niall Egan

Can I revert to the Deputy with that information? The figure for full employment would have been at its height during the Celtic Tiger. I do not have a specific figure off the top of my head.

Would I be right in thinking it is about 4%?

Mr. Niall Egan

Approximately, yes, that would be correct.

I think the workforce at that stage was about 2 million people, so 4% of 2 million is 80,000. Is that correct?

Mr. Niall Egan

Yes, approximately.

I would appreciate if Deputy Ó Cuív could be brief as Senator Wall is anxious to come in.

I will try to be as brief as possible. Based on this assumption that there are plenty of jobs available at all levels, including in construction, hospitality and so on, does Mr. Egan accept there is a fair number of people in they system who will never get commercial employment, that they might, if we focused on it, get either sheltered employment, or long term employment through schemes such as the Tús scheme, the community services programme, and so on, and that this dream that all of these people will get commercial employment is only that: a fantasy land?

Mr. Niall Egan

The Deputy quoted an approximate figure of 2 million people. The labour force has increased substantially since then. I think the current figure is 2.4 million or 2.5 million people in the labour force. There is always churn in the labour market. Even when we were at our peak of full employment with an unemployment figure of 4%, we would still have had a significant component on the live register. From memory, it was approximately 150,000 people, but maybe not exactly that number. That number represents two key elements. One is the churn, which is the normal labour market working in terms of people transitioning in and out of employment and moving between jobs. Two is probably the cohort the Deputy was referring to, a cohort who would have been long-term or very long-term unemployed.

The Department and Government policy since has been for the Department of Social Protection to take on board the community welfare office and FÁS services essentially to provide employment services to all individuals who are unemployed, with a particular focus on long-term and very long-term unemployed. That is the model Intreo has been built up on, and we have worked collaboratively with our external service partners to deliver that. The Deputy is correct. There are some individuals who are so distant from the labour market that a job is going to be a very long pathway for them to get to. However, the Department's policy is to engage with that individual and send him or her to progression opportunities that are best suited to his or her needs. I have spoken to many individuals within the sector. That can be just the structure of essentially getting them into a routine again that some of our providers currently provide. It can also be support employment schemes. Community employment, Tús, and the rural social scheme, RSS, are important employment supports for the cohorts the Deputy refers to and can lead to other longer term employment thereafter.

Will Mr. Egan tell me-----

No, Deputy Ó Cuív, I will bring in Senator Wall, who has, in fairness, been waiting a good while. I will bring Deputy Ó Cuív back in again later.

I thank the Chair. I thank Mr. Egan and Mr. Kane for their presentation. I have a couple of questions. Mr. Egan in his presentation said he would postpone the process for a short period into the new year. Will he confirm what a short period is? Is it a number of months? Is it the full 12 months? Will he also commit to the request by both unions which we met earlier that he would postpone this process for 12 months to allow for the best possible consultation between unions, stakeholders, and the Department to formulate policy on that? Mr. Egan might come back to us on a policy in that regard.

Second, in Mr. Egan's description of what may be contained in RFT 2, he said it was the inverse of the JobPath model. To me, what he described is what is happening in jobs clubs and local employment networks at the moment. Why are we going down this road? Why are we not ensuring and developing the local employment networks as they stand at the moment?

Has the Department has put a cost on losing 25 years of experience that most of those people working in this sector have, as well as the relationship with local employers which has been built up over those 25 years and which is critical to this process working? What value has the Department put on that? I would hope that value is far in excess of the €311 per employee Mr. Egan mentioned we are currently giving to the private sector.

Mr. Niall Egan

I thank Senator Wall. In relation to my reference in my opening statement to the postponement, the Department will be writing later today and early tomorrow to all existing local employment service and jobs club contractors that are going to be covered under phase 2 informing them of the need, because of some of the feedback we received from the meeting of 17 September with the ILDA, Fórsa and SIPTU, to give more time for the sector to work together and collaborate, and for partnerships to be developed. On foot of that, we will be writing to them informing them that we will be giving them a new contract for the first six months of next year. However, as I said in the opening statement, we are planning to proceed and go ahead with the request for tender for phase 2, with that tender to be issued before year end. It is important the time is used and is used well. We are happy to engage constructively and positively with those stakeholders between now and before that tender is issued. I know a previous speaker said there has been no or little engagement, but we have engaged extensively with the sector on it since 2018. We have listened very much to what it has had to say about the design and structure we are implementing.

The Senator asked a question about the value put on the 25 years of experience within the sector and the relationships that have been built up with local employers. We are very aware of that. We know the excellent service our existing service partners provide in that regard. We know that experience cannot be replicated by anyone else coming new to the market. That is why we have, within the RFT, specifically designated so many marks, in terms of the award criteria as part of the evaluation process, to that social value, those existing relationships, and that local community network in relation to the sector. That is an opportunity for those in the sector to put their best foot forward about their past experience and proven track record and their abilities to access other State supports available outside of the Department that can ultimately lead to a wrap-around service, whether that be health supports, supports via SICAP, or other supports via my Department or other Departments. We have not come up with a single metric for what that value is, but we believe we have reflected that value in the structure of the RFT under phase 1. I do not see a direct comparison with the figure of €311 for the JobPath referral, but I may I have mistaken that point. If I have, I am happy to clarify.

Would Senator Wall like to clarify that point?

I wanted to make sure we were valuing the 25 years of experience. Mr. Egan said he will be putting a value on it. I would very much welcome if he could share that value when he comes up with it. I am sure it is well in excess of €311. That is the point I was making and it is the only point I wanted to make. We cannot put a value on the excellent service, the 25 years of experience, and the relationship with local employers that is most critical to this service. I am sure that value is far in excess of €311. I am sure when the Department sits down to look at it, it will come up with a figure far in excess of that. That is the point I was making.

The Senator has made that point. I call Deputy Ó Cuív, to be followed by Deputy Paul Donnelly.

I will be brief. I said initially there is a big difference between the number of people on the live register and the number of people who are unemployed. There are people coming on to and leaving the live register all the time. That is well recognised in the Department. Anybody who checks the figures will note the difference. Some 40,000 people have not been in employment for a long time and if they were employed, it was for a very short time. We need to reach out to those people in a comprehensive way. It will take more time to reach out to them than it will take to reach out to people who would probably get employment even if there was no intervention. The issue is that the local employment service and jobs clubs focus on the hardest to reach and those who are most remote from the labour market to encourage them to enter those services. JobPath has had success after success. Obviously, it focused on the people most likely to get jobs and, in many cases, those people would probably have jobs in any event.

I have two specific questions. How much is the JobPath model dictated by our EU requirements and obligations. Can Mr. Egan give us details of those EU obligations? If they are absolute obligations under EU rules, there is damn all we can do about it. Mr. Egan said the tendering process is constrained by EU law. He might forward us a copy of the law - I am not asking for the legal opinion of the EU laws he quoted - to enable us to separate what is Irish law and what is EU law. Each of us is a Member of the Oireachtas. If some of the matters are related to issues that arise purely in Irish law rather than EU law, we could suggest to our colleagues that the Oireachtas introduce legislation to change the law in order that tendering could take into account and favour non-profit bodies rather than entities working purely on the basis of the profit motive. That is one of the big issues that arises. Multinational companies motivated purely by profit, which have substantial resources to cover tendering, are entering this market and competing with non-profit bodies that operate on the ground, are based locally and might be able to deliver better services. One of the challenges we face is the obsession in the modern world with measuring everything. Some of the best things in life are very hard to measure.

Mr. Egan said the Department consulted and listened, contrary to the evidence that has been presented by workers, the representatives of trade union members who are here today, companies and elected members. Will he specifically point out what the Department included the tender that came directly from the feedback from those working in and employing people in the sector and those affected by changes in the sector?

Mr. Egan might respond to those questions and if he has any concluding remarks, he might make them.

Mr. Niall Egan

I agree with Deputy Ó Cuív that we need to reach out in a comprehensive way to those who are very long-term unemployed and very distant from the labour market. The employment service we are building, particularly the regional employment services, will have that mechanism and feature. That model will be the best placed and have the highest skills set to help those individuals on their journey. As I said, that journey does and will involve progression into employment, education or employment support programmes, not only employment. That has been reflected in the regional employment service RFT.

Regarding the JobPath focus on those who are most likely to be placed, I accept the temptation is to see it that way but the contract we have with both JobPath providers, Turas Nua, which is a farm co-operative, and Seetec, which is an employee trust ownership structure, is very much that they must engage with every individual once every 20 days. We inspect that very carefully. One of the fears in contracting for public employment services is that people would cream and park, cream being to focus on those closest to the labour market in terms of getting them a job, and park being not engaging with those who are furthest from labour market. The providers are required to engage with all individuals once every 20 days. We carefully examine that as part of the management of the contracts.

It is not the case that the JobPath model, per se, has been dictated by an EU obligation. When the Department issued the tender for JobPath in 2014, we created an increase of burst capacity to deal with an extraordinary level of unemployment in the Irish labour market at the time. We were then able to focus and redistribute short-term unemployed individuals who were being dealt with by the Intreo service and that continues to be the case. Any individual who is long-term unemployed is sent to either JobPath, having been chosen randomly, or he or she can be referred to the local employment service or jobs clubs service. We are sending long-term unemployed people to those three separate providers which are contracted to provide an employment service. JobPath and the local employment service are essentially contracted to provide the same service, namely, 12 months of intensive employment service, support and advice.

When it comes to an EU obligation, from a legal perspective it is EU Directive 2014/14, which we will forward to the clerk to the committee, for the members' information. Essentially, it relates to the provision of that employment service. On the basis that we tendered for that in 2014, we are required to retender for all employment services on foot of the legal advice we have received to date.

Deputy Donnelly asked about the way we have listened to those involved and the way that can be manifested in the design of the RFT, which we published at the end of May. There are a few features in that contract. One of the key lessons we learned from our engagement with the sector was that when we went to market with JobPath we required successful tenders to have significant upfront capital. There is no such requirement in the phase 1 tender. The issue of cash flow was also raised as a major concern. We acknowledge the providers operate on a cost-met structure. They have a two-month float from the Department and operate on that basis. We gave a commitment in that respect to all representatives prior to publication. That is included in the RFT, but I acknowledge it has been overlooked and we need to strengthen it. We operate all our contracts on a reasonable basis. We are aware cash flow will be an issue for the new service provision. We are committed to providing upfront cash flow prior to referral starting for the new services.

We also considered the issue of lot sizes. If we were to adopt a cold and calculated approach at a remove from the service, we would have lot sizes that are on a national structure, more akin to the JobPath model of four to five lots. We are now considering lot sizes realistically nationwide for the regional employment service of around 20. We have taken that issue on board.

We also considered the issue of multi-annual contracts in the context of the existing model of annual contracts that did not offer certainty and flexibility from year to year. The multi-annual dimension has been included on foot of what we heard. The 23% of marks awarded for social value is also important.

In terms of costs, normally, from the Department’s perspective, when we procure, our procurement requirements are typically 40% or 45% of costs. In this procurement, our requirements were 25% of costs. That is exceptionally low by the Department's standards. In addition, because we want a high-quality employment service that we know will involve a significant cost, we introduced a minimum cost requirement based on the cost of the delivery of service. It narrows the cost implications very substantially between a minimum and a maximum. It reduces the cost requirement. That is to ensure we protect against low-cost bids and that the cost structure we receive from tenderers reflects the cost of the delivery. We are confident it does that based on the information we have.

Deputy Kerrane has a brief question.

It would be useful for the committee if Mr. Egan explained what he envisages post-tender with everything falling in line with the Department's plan as regards the second tender and everything else?

What will employment services look like post-tender? Will it be a case of short-term unemployed people going here and long-term unemployed people going there? Does he acknowledge that the new model being proposed is moving away from a not-for-profit approach?

I asked a question on a job being the only outcome counted. Does the Department count the number of referrals to training and education, community employment and Tús? As Mr. Egan explained, the path to a job is longer for some than for others.

On annual turnover, it seems the figure is not absolutely mandatory. Given that this is news to me and, I assume, most members of the committee, was that made clear to those going to bid in the first place? The Chairman suggested that the external review, which I mentioned earlier, be provided to the committee. The Department can redact pricing and whatever else it may wish to. Is the Department willing to do that?

I referred to the table showing figures for JobPath - I understand what the committee looked for - because JobPath is different in that it regards 13 weeks as a job being sustained. If the Department is saying 24,000 people sustained a job for 12 months or more, given the figure of 376,000 people, or even if we take the 312,000 people who signed a personal progression plan, that indicates a success rate of between 6% and 7%. I assume the total cost of JobPath to the taxpayer is approaching €300 million. I know people remain on JobPath and they will be run off and everything else. However, of the more than 300,000 people referred, at a cost of almost €300 million, the success rate for getting a job that is sustained for more than 12 months, which is not an especially long time in any event, means the rest of the jobs are not being sustained for a year and we are looking at a success rate of 6% to 7%.

Mr. Niall Egan

I thank the Deputy. I ask Mr. Kane to address the JobPath queries and then I will come back in.

Mr. Chris Kane

On the whole, that is what is set out in the paper, and it is correct. However, it is important to note that, again, JobPath rates are recorded on a basis of cohort and when somebody is referred. There is performance that is not recorded, so we do not fully know the position. Of the people who are engaged with JobPath, many of the 312,000 people who have agreed a personal progression plan are still in their first year or even 18 months of engagement and have not started a job. Many of those who may have started a job have not been in the job long enough to sustain it beyond 13, 26, 39 or 52 weeks. What the Deputy says is correct and that is the information we sent to her. However, it is important to note that not all performance has either been achieved or even necessarily recorded in that.

Mr. Niall Egan

To add to what Mr. Kane has said, it is important to acknowledge that JobPath was procured to provide an unemployment service and assistance for 12 months' duration. That is the metric we need to use. It is the same with our other service partners. Looking at just the long-term, 12-month job sustainment level would be too narrow a focus in relation to the overall supported offers. JobPath has provided over 70,000 people with access to employment and helped people progress closer to employment, akin to our other service providers. It is certainly the provider for which we have better metrics and visibility. The costs are closer to €275 million at the moment, just to let the Deputy know.

On the Deputy's question on the post-tender public employment service, the Department's policy on this is that Intreo will continue to act as the central hub of the public employment service. It will continue to provide walk-in services to individuals and also focus predominantly on the short-term unemployed. Individuals who have been unemployed for 12 months and become long-term unemployed will then be referred to a new national employment service for a 12-month duration. If they remain unemployed at that point, they will then be referred to the regional employment service, at 24 months or longer, for another engagement of between 12 and 18 months. As part of that, they be prioritised and engaged, with a view to achieving progression that best suits their personal requirements. That may include community employment or other similar schemes.

I do not accept that from the Department's perspective, we are getting rid of or closing the door to not-for-profit provision. What we are contracting for is what we currently have contracted for, namely, employment services. We are creating separate streams within the existing employment service structure for those who are long-term unemployed and those who have been unemployed for 24 months. We acknowledge, recognise and require a dedicated support level, one which we have at the moment and want to expand across the entire country through the provision of services in areas that do not currently have a local employment service. That is what the regional employment service is trying to achieve. It is actually creating an integrated customer journey between the different service partners we currently have.

On the mandatory turnover not being mandatory, I apologise to the Deputy but I may have inadvertently misled her on that. The mandatory requirements in phase 1 are mandatory. I was alluding to the fact that partnerships, collaborations and tenders from each area can cumulatively add up to that mandatory requirement. For argument's sake, if two partnerships come together with three reference contracts between them, cumulatively the value will be accounted towards that turnover requirement under phase 1. That is something we will look at in relation to phase 2 but we will have some sort of turnover requirement in phase 2.

On the external review, as I said, there is sensitive material within that in terms of the lot sizes and costings. That is a significant component of that report. There is very little in that report without that at the moment. We are happy to share that with the committee but a lot of the material will be redacted on foot of the procurement. I am just acknowledging that at the outset.

Since we are obsessed with figures, I think Mr. Egan said 70,000 secured short-term employment and 20,000 secured long-term employment over 12 months, and that there were 300,000 people. I look at these services as somebody who employed people and came to the conclusion that, for a fair number of people, it does not matter what is thrown at them in the form of job losses or whatever because they will find new employment fairly fast. Has any analysis been done on how many of the 20,000 people who secured long-term employment and the 70,000 people who secured short-term employment would have secured employment if JobPath not existed? That is the true value of JobPath. It is not the number who managed to get a job because from my experience of the world, it is fair to surmise that different people have different abilities for getting employment . We do not seem to get a breakdown of the number who would have secured a job in any event. I say this because the real test is whether jobs are being secured for people who would not have got employment. That obviously means that the further away from the employment market a person is, the less skills and employability, to use a term that is very hard to define, that he or she has, the harder he or she will find it to get a job. There are some people with very high qualifications who are not very employable. We have all met some of them in our lives. Since we so are obsessed with figures these days, does the Department have any analysis on this?

I thank the Deputy and ask the officials for a brief answer because we literally have a minute left. If not, they can send some information to the committee.

Mr. Niall Egan

I thank the Deputy. We provided a copy of the econometric review conducted by the Department and the OECD into JobPath. That, I think, provides the answers he is looking for. Very briefly, we undertook a review of the performance of JobPath. JobPath only deals with the long-term unemployed, so the short-term cohort was not covered. We examined individuals and broke them down by similar characteristics. We looked at individuals who were supported by JobPath and those with the same type of characteristics who were supported by other services.

JobPath participants enjoy a 17% higher wage level than individuals who were not supported by JobPath. There is a 26% improvement in employment outcomes for JobPath participants compared with individuals who were not supported by JobPath. Combined, that amounts to a cumulative overall improvement for JobPath participants of 37%, between employment and earnings, in comparison with individuals who were not supported by JobPath. That is the level of analysis that we have undertaken. We are committed to continue looking at econometric reviews of a similar nature in relation to the future services as we contract them.

I thank Mr. Egan and Mr. Kane for giving evidence to the committee today. The committee will furnish the Department with a report on this issue.

The joint committee adjourned 11.30 a.m. until Monday, 4 October 2021.